Planning and Development Minister Ahsan Iqbal has warned that Pakistan’s rising debt servicing costs are significantly restricting fiscal space for development spending and slowing down key infrastructure projects.
Speaking on June 1, 2026, he said a growing share of the national budget is being consumed by loan repayments, leaving fewer resources available for growth-oriented investment.
He noted that the federal Public Sector Development Programme (PSDP) has remained nearly unchanged at around Rs. 1,000 billion for the past eight years, while provincial development spending has increased sharply from Rs. 1,000 billion to Rs. 2,869 billion over the same period.
The minister added that the total cost of ongoing development projects has now reached Rs. 10.82 trillion, creating a heavy financing burden and slowing execution.
For FY2026–27, a development budget of Rs. 1,126 billion has been proposed, while ministries have submitted demands of Rs. 4,097 billion, leaving a large gap that cannot be financed under current fiscal constraints.
He said the government will prioritize high-impact projects, with focus on underserved regions. Planned allocations include Rs. 125 billion for the N-25 Expressway and Rs. 153 billion for AJK, Gilgit-Baltistan, and merged districts.
Ahsan Iqbal also pointed out that heavy borrowing between 2019 and 2022 is now translating into large repayment obligations, further tightening fiscal space for development.
